Making sense of the markets this week: October 2
Of course, share prices are still finding their equilibrium after being shot into the stratosphere by last year’s meme stock craze.
Personally, I think there is still a bit of a hangover effect going on in terms of the current share price not really being indicative of the true value of the company. BlackBerry might be well on its way to long-term profitability, but I don’t need to pay that much to be along for the journey.
Nike just did it, and Bed Bath & Beyond just did not
Nike (NKE/NYSE) had news on Friday that might reveal more about the fragile psychology of the current market than it does any inherent weakness in the company. It was a tough day nonetheless.
The Swoosh started its day by announcing a strong quarter with earnings coming in at USD$0.93 (versus USD$0.92 predicted) and revenues rising 4% year-over-year to USD$12.69 billion (versus USD$12.27 billion predicted).
With results like these, one might think the market would have a pretty neutral response. Instead, citing high inventories and a crushingly-high U.S. dollar, investors sold off shares to the tune of 3.41% throughout the day, and then the share price collapsed 9.36% in after hours trading. So much for meeting anticipated sales and income targets!
On the other hand, even though Bed Bath & Beyond (BBBY/NASDAQ) substantially underperformed, relative to expectations, investors didn’t punish the retailer with their final verdict. With losses per share plunging to USD$3.22 (versus a USD$1.47 loss predicted), and revenues sinking 22% year-over-year to USD$1.44 billion (versus USD$1.47 billion expected) the market only saw fit to hand shareholders a 4.18% loss with shares down another 1.6% in after hours trading.
One thing appears to grow more certain, as these big retailers build up massive inventories, Black Friday and pre-Christmas sales should be incredible this year, as companies are looking to liquidate products from their overstuffed warehouses. Perhaps this will help households on the inflation front.
“The sky is falling!” Where can I buy a piece?
It’s no secret that 2022 has been a rough year for stock market investors, but the widespread asset class damage in the Investopedia graphic below really caught my eye.